Well, 4 hours and no answer from C yahoogroups so I'll try here...

Often my soft shadows produce an block-shaped area where the shadow is lighter as in this image below. The settings used are included - there is one bulb in the scene set to softshadows with a radius of one.

Have I asked yet another unanswerable question? : ) I would think some of the C3 producers/advanced users would know this - perhaps none are around. (Yet I see them answering other questions... oh well)